WPP’s Sorrell to take on rebels as pay row rolls on
The row between investors and British companies over soaring executive pay will embroil one of Britain’s most high profile businessmen on Wednesday when WPP chief Martin Sorrell appears at a vote to approve his 60% pay rise.business Updated: Jun 11, 2012 20:53 IST
The row between investors and British companies over soaring executive pay will embroil one of Britain’s most high profile businessmen on Wednesday when WPP chief Martin Sorrell appears at a vote to approve his 60% pay rise.
A number of advisory groups and leading shareholders at the advertising group say they will vote against the proposed increase for the chief executive because it is out of sync with the returns made to investors.
Sorrell, who founded WPP in 1985 and has grown it by encouraging companies to place their advertising with his firm, is now facing one of his biggest challenges to persuade shareholders to focus on his performance and not the wider pay issue.
Far from shirking the fight, Sorrell has argued that he deserves his 6.8 million pound ($10.48 million) pay for turning WPP into the world’s leading advertising group with more than 160,000 employees across 108 countries.
The backlash against executive pay, he says, stems from an earlier controversy over the level of pay awarded to bankers who have been blamed for the financial crisis. And his salary should be compared to the pay of his rivals in the United States and elsewhere, rather than British ad groups which are much smaller.
Nevertheless, a sizeable chunk of WPP shareholders look set to make the company the latest battleground in Britain’s so-called “Shareholder Spring” that has seen investors disgruntled by flatlining or falling share prices vent their anger by voting against executive pay deals.
“We’re not nervous about giving people serious amounts of money, we’re just very concerned that it has to be aligned to the owners of the business. We’ll vote against it because it’s not aligned with us,” said one top 20 WPP shareholder.
WPP has defended its actions by saying Sorrell’s pay is performance related and reflects the fact the group has positioned itself well in recent years.